[ESTABLISHING A BUSINESS ENTITY IN ARGENTINA]
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a) if the net income of the company does not exceed ARS 101,679,575.26 (approx. USD 78,215) in the fiscal year, a 25% tax rate applies; b) if the net income exceeds ARS 101,679,575.26 (approx. USD 78,215) but is less than ARS 1,016,795,752.62 (approx. USD 782,151), a fixed amount of ARS 25,419,893.82 (approx. USD 19,554) must be paid, plus a tax rate of 30% over the income exceeding ARS 101,679,575.26 (approx. USD 78,215); and c) if the net income exceeds ARS 1,016,795,752.62 (approx. USD 782,151) a fixed amount of ARS 299.954.747,02 (approx. USD 230,734) must be paid plus a tax rate of 35% over the income exceeding 1.016.795.752,62 (approx. USD 782,151). Losses may be carried forward for a period of 5 years. • Withholding tax in dividends: A withholding tax of 7% applies to the payment of dividends to resident individuals and to non-resident individuals or legal entities. • Value Added Tax: the general VAT rate for Argentine local transactions is 21 %. For certain goods or services could be 10.5%. There are also exemptions that may apply. For example, exports are levied at a 0% VAT and exporters can be reimbursed for the local VAT paid related to its exportation. • Bank credits and debits tax: credits and debits on local bank accounts are subject to a 0.6 % tax rate on the debits and a 0.6 % tax rate on the credits. In general,
depending on the kind of activity of the local entity certain exceptions, or reduced tax taxes, may apply. There is an additional 1.2% tax rate for cash withdrawals, except for SMEs (Small and Medium Size entities). In general, this tax generates a tax credit of 33% that can be used to offset income tax or its instalments. • Customs duties: Import/export of “goods” are taxed at different customs rates according to each tariff position (identification for customs purposes). • Social security taxes (SST): Employers Contribution for SST: The social security tax rate for employers which activities are related to commerce or services and who are not a SMEs 2 is 20,40% and for the rest of employers the tax rate is 18,00%. The health care tax rate is 6%. So, it is 26,4% for the first case and 24% for the second one and it applies on the gross salary. Employee Payment for SST: Please note that the local company shall withhold the relevant social security taxes from the employee’s salaries which represent approximately 17% of the gross salary, health care included. Also, the company shall withhold the income tax from the
employee’s salaries if applicable. B. TAXES ON SHAREHOLDERS:
• Capital gains tax (Direct or Indirect Sale): In broad terms, direct or indirect sale is taxable at a 15 % on the net gain (sale price minus acquisition cost) or 13.5% of the total sale price (gross price of the operation). There are some requisites to comply with for the indirect capital gains to be taxed. If there is a seller located abroad and in a non-cooperative
2 SME: small and medium-sized enterprises.
ILN Corporate Group – Establishing a Business Entity Series
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